Xia et al v. Harrah's Arizona Corporation

Filing 22

ORDER denying 11 Motion to Dismiss for Lack of Jurisdiction. Signed by Chief Judge G Murray Snow on 5/10/24. (DXD)

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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Jie Xia, et al.,

No. CV-23-02086-PHX-GMS
Plaintiffs,

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v.

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Harrah’s Arizona Corporation,

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ORDER

Defendant.

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Pending before the Court is Defendant Harrah’s Arizona Corporation’s Motion to
Dismiss (Doc. 11). For the reasons detailed below, Defendant’s Motion is denied.
BACKGROUND

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The Plaintiffs in this matter are five individuals—Jie Xia, Necy Sundquist, Mary

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Grace Abon, Susan Samons, and Maria Henry—who each allege Defendant violated

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various federal laws, including 42 U.S.C. § 1981 and provisions of Title VII, when it

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terminated Plaintiffs’ employment. Plaintiffs are all non-white, female former employees

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of Defendant. (Doc. 1 at 2–3).

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Defendant is a Nevada corporation that, pursuant to a management contract with the

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Ak-Chin Indian Community (“Community” or “Tribe”), operates and manages the

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Ak-Chin Casino and Resort in Maricopa, Arizona. (Id. at 2, 9). The Community is a

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federally recognized Indian tribe. (Doc. 11-1 at 2). In the Summer of 2022, Harrah’s added

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an electronic craps game called Roll To Win to the casino floor. (Doc. 1 at 3). Roll To

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Win automated many functions of a traditional craps game, requiring the employee running

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it to merely input the results of dice rolls. (Id. at 3–4). Defendant believed that, due to the

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automation, Roll To Win required less training to operate and, as a result, employees were

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sometimes tasked to operate Roll To Win despite the game not being part of their regular

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rotation. (Id. at 4). Plaintiffs were five of such employees. (Id. at 6).

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Over time, Defendants became aware that the Roll To Win tables, as operated, were

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vulnerable to various cheating strategies used by certain gamblers. (Id. at 5). After

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identifying these strategies, Defendant initiated an investigation which identified between

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thirteen and nineteen table dealers who were working the Roll To Win tables while

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cheating occurred. (Id. at 6). Plaintiffs allege they received specific written guidance on

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how to manage the Roll To Win tables only after Defendant completed its investigation.

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(Id.). After Defendant’s investigation, the Ak-Chin Tribal Gaming Agency (“Agency”)

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began the process of revoking Plaintiffs’ gaming licenses, during which Plaintiffs were

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suspended from work without pay. (Id.). Plaintiffs allege that Caucasian and male

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employees who managed Roll To Win tables when cheating occurred were not suspended.

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(Id.). At hearings before the Agency, Defendant argued that Plaintiffs colluded with the

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cheating gamblers, and made those same representations to tribal police and the FBI. (Id.

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at 7). Despite there being no criminal charges brought against Plaintiffs, all five Plaintiffs

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were ultimately terminated from their employment. (Id. at 8). This was each of Plaintiffs’

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first disciplinary action; Plaintiffs never received any warning or coaching prior to

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termination, which are typically given in disciplinary cases prior to termination. (Id.). In

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a separate investigation by the Arizona Department of Gaming (“ADOG”), the ADOG

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refused to revoke Plaintiffs’ gaming licenses and instead determined that cheating occurred

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because of Defendant’s failure to properly train. (Id. at 9–10).

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On October 5, 2023, Plaintiffs filed this action against Defendant alleging

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discrimination and retaliation under 42 U.S.C. § 1981, wrongful termination and retaliation

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under Title VII, and termination in violation of public policy under state law. (Id. at 10–

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15). On December 12, 2023, Defendant filed a Motion to Dismiss solely arguing this Court

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lacks subject matter jurisdiction because of the Community’s sovereign immunity.

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DISCUSSION
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Legal Standard

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Federal courts are courts of limited jurisdiction. Stock W., Inc. v. Confederated

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Tribes of the Colville Rsrv., 873 F.2d 1221, 1225 (9th Cir. 1989) (quoting Owen Equip. &

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Erection Co. v. Kroger, 437 U.S. 365, 374 (1978)). When subject matter jurisdiction is

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challenged, the party asserting jurisdiction has the burden of establishing that it exists.

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Kingman Reef Atoll Invs., L.L.C., v. United States, 541 F.3d 1189, 1197 (9th Cir. 2008).

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Parties may bring either facial or factual subject matter jurisdiction challenges. A facial

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challenge asserts that the complaint, on its face, fails to allege facts that would invoke

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federal jurisdiction. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004).

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A factual attack, on the other hand, disputes the veracity of allegations in the complaint

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that would, if true, invoke federal jurisdiction. Id. When resolving a facial attack on

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subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the Court

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accepts the allegations of the complaint as true. Mason v. Arizona, 260 F. Supp. 2d 807,

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815 (D. Ariz. 2003).

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II.

Analysis

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Defendant challenges this Court’s subject matter jurisdiction by arguing it is

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protected by the Community’s tribal sovereign immunity. “Indian tribes are ‘domestic

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dependent nations’ that exercise inherent sovereign authority over their members and

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territories. Suits against Indian tribes are thus barred by sovereign immunity absent a clear

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waiver by the tribe or congressional abrogation.” Okla. Tax Comm’n v. Citizen Band

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Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509 (1991). Tribal sovereign immunity

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extends to tribal business activities. Allen v. Gold Country Casino, 464 F.3d 1044, 1046

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(9th Cir. 2006). Whether a particular business venture enjoys tribal sovereign immunity

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turns on whether “the entity acts as an arm of the tribe so that its activities are properly

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deemed to be those of the tribe.” Id.

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In determining whether an entity is entitled to sovereign
immunity as an ‘arm of the tribe,’ we examine several factors
including: ‘(1) the method of creation of the economic entities;
(2) their purpose; (3) their structure, ownership, and
management, including the amount of control the tribe has over
the entities; (4) the tribe’s intent with respect to the sharing of
its sovereign immunity; and (5) the financial relationship
between the tribe and the entities.’

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White v. Univ. of Cali., 765 F.3d 1010, 1025 (9th Cir. 2014).

Accordingly, non-

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governmental tribal businesses commonly enjoy sovereign immunity. See Allen, 464 F.3d

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at 1047 (holding a casino wholly owned and operated by the Tribe enjoyed sovereign

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immunity); Breakthrough Mgmt. Grp., Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d

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1173, 1191–92 (10th Cir. 2010) (holding a Tribal Economic Development Authority,

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formed under the laws of the tribe, enjoyed sovereign immunity).

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Under the above factors, Defendant is not an arm of the Community and, thus,

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cannot claim the Community’s sovereign immunity. First, Defendant is formed under the

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laws of the state of Nevada, not under the laws of the Community. Second, while

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Defendant’s successful operations results in increased Community funds, Defendant is a

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for-profit corporation. The profits it generates are not returned to the Tribe, but to the

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corporate shareholders. While Defendant presumably generates these profits through its

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expertise in managing and operating the Community’s casino, such profits are not the

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Tribe’s. Even though the Community’s purpose in contracting with Defendant is to

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generate revenue for the Tribe, Defendant’s purpose is to take a portion of that revenue for

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its shareholders, which, notably, does not include the Community.

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Third, as mentioned above, the Tribe does not own or manage the Defendant. The

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Community may have leverage over the Defendant in that it can choose to terminate its

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management agreement with Defendant. The Community also has the regulatory control

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that any sovereign has over a gaming operation within its sovereign territory. To the extent

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there is any other direct Community control over Defendant, such control does not rise to

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such a level so that Defendant is an arm of the tribe.

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Fourth, there is no evidence that the Community ever intended to share its sovereign

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immunity with Defendant. There are no declarations by Community Council, sections of

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the management agreement, or ordinances that indicate Defendant may use the Tribe’s

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sovereign immunity. Finally, as discussed above, the financial relationship between the

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Community and the Defendant is clear: The Community pays Defendant to operate and

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manage the Community’s casino using its expert knowledge.

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Defendant earns a fee. The Community does not, for example, own any portion of

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Defendant.

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For those services,

Considering these factors, Defendant is not an arm of the Community. Accordingly,
Defendant does not enjoy the Community’s sovereign immunity.

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CONCLUSION

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Accordingly,

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IT IS THEREFORE ORDERED that Defendant Harrah’s Arizona Corporation’s

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Motion to Dismiss (Doc. 11) is DENIED.
Dated this 10th day of May, 2024.

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